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“Nutrien has delivered record earnings in 2022 due to the strength of agriculture fundamentals, higher fertilizer prices and excellent Retail performance. During the third quarter, we saw a temporary reduction in potash purchasing in North America and Brazil, which has impacted our sales volumes and realized prices in the second half of the year. However, the underlying demand drivers remain strong and global fertilizer supply challenges still persist, creating a supportive environment for Nutrien as we look ahead to 2023 and beyond,” commented Ken Seitz, Nutrien’s President and CEO.

“We are focused on efficiently supplying our customers with the products and services they need to help sustainably feed a growing world. We continue to take a multi-year view of the market and remain confident that our additional low-cost potash and nitrogen production capability will be required to meet future demand,” added Mr. Seitz.

Highlights:

  • Nutrien generated record net earnings of $6.6 billion and adjusted EBITDA 1 of $10.1 billion in the first nine months of 2022 due to higher realized prices and strong Retail performance, more than offsetting a reduction in fertilizer sales volumes. As a result, cash provided by operating activities improved to $3.4 billion in the first nine months of 2022.
  • Nutrien revised full-year 2022 adjusted EBITDA guidance 1 and adjusted net earnings per share guidance 1 to $12.2 to $13.2 billion and $13.25 to $14.50 per share, respectively.
  • Nutrien Ag Solutions (“Retail”) delivered record adjusted EBITDA in the first nine months of 2022, due to supportive market conditions in key regions where we operate. Retail cash operating coverage ratio 1 as at September 30, 2022 improved to 55 percent compared to 59 percent for the same period in 2021 driven by higher margins.
  • Potash adjusted EBITDA increased in the third quarter and the first nine months of 2022 compared to the prior year due to higher net realized selling prices and record offshore sales volumes, more than offsetting lower North American sales volumes.
  • Nitrogen third quarter and first nine months of 2022 adjusted EBITDA increased compared to the prior year due to higher net realized selling prices that more than offset higher natural gas costs and lower ammonia and urea sales volumes.
  • In the third quarter of 2022, we recognized a non-cash impairment reversal of $330 million associated with our Phosphate operations and $780 million for the first nine months due to a more favorable outlook for phosphate margins.
  • Nutrien repurchased approximately 40 million shares year-to-date as of November 1, 2022, under our share repurchase programs, for a total of approximately $3.5 billion. Nutrien plans to allocate approximately $4 billion to share repurchases in 2022. While some repurchases may now extend into the first quarter of 2023 due to lower forecasted operating cash flow in 2022, we still intend on completing our existing 10 percent share repurchase program prior to its expiry in February 2023.
1 These (and any related guidance, if applicable) are non-IFRS financial measures. See the “Non-IFRS Financial Measures” section for further information.

Management’s Discussion and Analysis

The following management’s discussion and analysis (“MD&A”) is the responsibility of management and is dated as of November 2, 2022. The Board of Directors (“Board”) of Nutrien carries out its responsibility for review of this disclosure principally through its audit committee, comprised exclusively of independent directors. The audit committee reviews and, prior to its publication, approves this disclosure pursuant to the authority delegated to it by the Board. The term “Nutrien” refers to Nutrien Ltd. and the terms “we”, “us”, “our”, “Nutrien” and “the Company” refer to Nutrien and, as applicable, Nutrien and its direct and indirect subsidiaries on a consolidated basis. Additional information relating to Nutrien (which, except as otherwise noted, is not incorporated by reference herein), including our annual report dated February 17, 2022 (“2021 Annual Report”), which includes our annual audited consolidated financial statements and MD&A, and our annual information form dated February 17, 2022 (“2021 Annual Information Form”), each for the year ended December 31, 2021, can be found on SEDAR at www.sedar.com and on EDGAR at www.sec.gov . No update is provided to the disclosure in our 2021 annual MD&A except for material information since the date of our annual MD&A. The Company is a foreign private issuer under the rules and regulations of the US Securities and Exchange Commission (the “SEC”).

This MD&A is based on and should be read in conjunction with the Company’s unaudited interim condensed consolidated financial statements as at and for the three and nine months ended September 30, 2022 (“interim financial statements”) based on International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board and prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting”, unless otherwise noted. This MD&A contains certain non-IFRS financial measures and ratios and forward-looking statements, which are described in the “Non-IFRS Financial Measures” and the “Forward-Looking Statements” sections, respectively.

Market Outlook and Guidance

Agriculture and Retail

  • Global grain stocks-to-use ratio, excluding China, is projected to decline to the lowest level in more than a quarter century, driven by reduced corn and wheat production expectations in the US and Europe. As a result of historically tight supply and demand balances, spot prices of corn, soybeans and wheat are up 25 to 50 percent compared to the 10-year average and we expect strong futures prices will provide an incentive for growers to boost production in 2023.
  • The re-opening of the Black Sea to Ukrainian grain exports positively impacted exports from the region but there is uncertainty over the continuation of the United Nations brokered agreement with Russia. The US Department of Agriculture (USDA) projects that Ukrainian grain exports will decline by 44 percent year-over-year in 2023, in large part driven by reduced production levels.
  • Weather has been favorable in North America and we anticipate that the rapid pace of harvest will support strong fall ammonia demand and normal application rates of potash, phosphate and crop protection products.
  • South American spring crop planting is proceeding with a mix of planting conditions. Argentina continues to be impacted by La Nina-related drought, while planting conditions in much of Brazil have generally been favorable. We expect that Brazilian soybean acreage will increase by 3 to 4 percent, which is also expected to support a proportional increase in safrinha corn acreage.

Crop Nutrient Markets

  • Potash shipments from Belarus are projected to be down 50 to 60 percent and Russia down 20 to 25 percent in 2022 compared to the prior year, in line with our previous expectations. We have lowered our global potash shipment forecast to between 60 and 62 million tonnes in 2022, largely due to the impact of higher-than-expected inventory and cautious buying in North America and Brazil during the second half of 2022.
  • We expect robust agricultural fundamentals will support increased potash consumption in 2023 and believe pent-up demand will emerge as inventories are drawn down and prices stabilize. We expect potash supply from Eastern Europe will continue to be constrained in 2023, with shipments from Belarus projected to be down 40 to 60 percent and Russia down 15 to 30 percent compared to 2021 levels. Global potash shipments are forecast between 64 to 67 million tonnes in 2023, with projected Nutrien potash sales volumes of approximately 15 million tonnes.
  • Nitrogen prices continue to be supported by historically high European natural gas prices that have led to significant curtailments of ammonia and downstream nitrogen products. Shifts in global nitrogen trade flows have led to higher US exports and lower import volumes, which we expect will result in a tight North American supply and demand balance entering 2023.
  • Chinese urea and phosphate export restrictions have limited exports in 2022 and are expected to persist into 2023. The restrictions have led to low Chinese phosphate operating rates, maintaining relatively tight global phosphate supplies, while contributing to lower global sulfur prices and supporting phosphate production margins.

Financial Guidance

  • Nutrien revised its full-year 2022 adjusted EBITDA guidance and full-year 2022 adjusted net earnings per share guidance primarily due to lower expected Potash earnings as a result of lower potash sales volumes and realized prices, which more than offset stronger expected Retail earnings. Adjusted net earnings per share guidance includes our plan to allocate approximately $4 billion to share repurchases in 2022.
  • Nutrien lowered potash sales volume guidance primarily to reflect the impact of the compressed spring application season in North America that resulted in higher inventory carry-over and cautious purchasing.
  • Nutrien lowered nitrogen sales volume guidance to reflect the impact of Trinidad gas curtailments during the second half of 2022.

All guidance numbers, including those noted above are outlined in the table below. Refer to page 53 of Nutrien’s 2021 Annual Report for related assumptions and sensitivities.

Guidance Ranges 1 as of

Nov 2, 2022

Aug 3, 2022

(billions of US dollars, except as otherwise noted)

Low

High

Low

High

Adjusted net earnings per share 2

13.25

14.50

15.80

17.80

Adjusted EBITDA 2

12.2

13.2

14.0

15.5

Retail adjusted EBITDA

2.15

2.25

2.10

2.20

Potash adjusted EBITDA

5.8

6.2

7.6

8.2

Nitrogen adjusted EBITDA

4.1

4.4

4.0

4.7

Phosphate adjusted EBITDA (in millions of US dollars)

700

800

750

850

Potash sales tonnes (millions) 3

12.5

12.9

14.3

14.9

Nitrogen sales tonnes (millions) 3

10.4

10.5

10.6

11.0

Depreciation and amortization

2.0

2.1

2.0

2.1

Effective tax rate on adjusted earnings (%)

25.0

26.0

25.5

26.5

Sustaining capital expenditures 4

1.3

1.4

1.3

1.4

1 See the “Forward-Looking Statements” section.

2 These are non-IFRS financial measures. See the “Non-IFRS Financial Measures” section.

3 Manufactured product only. Nitrogen sales tonnes excludes ESN® products.

4 This is a supplementary financial measure. See the “Other Financial Measures” section.

Consolidated Results

Three Months Ended September 30

Nine Months Ended September 30

(millions of US dollars, except as otherwise noted)

2022

2021

% Change

2022

2021

% Change

Sales

8,188

6,024

36

30,351

20,445

48

Freight, transportation and distribution

204

220

(7)

628

653

(4)

Cost of goods sold

4,722

3,639

30

17,205

13,589

27

Gross margin

3,262

2,165

51

12,518

6,203

102

Expenses

1,056

1,108

(5)

3,368

3,249

4

Net earnings

1,583

726

118

6,569

1,972

233

Adjusted EBITDA 1

2,467

1,642

50

10,075

4,663

116

Diluted net earnings per share

2.94

1.25

135

11.96

3.41

251

Adjusted net earnings per share 1

2.51

1.38

82

11.10

3.75

196

Cash provided by (used in) operating activities

878

(1,565)

n/m

3,374

249

n/m

Free cash flow 1

1,543

862

79

6,770

2,751

146

Free cash flow including changes in non-cash operating working capital 1

450

(1,890)

n/m

2,496

(544)

n/m

1 These are non-IFRS financial measures. See the “Non-IFRS Financial Measures” section.

Net earnings and adjusted EBITDA increased in the third quarter and first nine months of 2022 compared to the same periods in 2021. This was due to higher net realized selling prices from global supply uncertainties across our nutrient businesses and strong Retail performance. In the third quarter of 2022, we recorded a non-cash impairment reversal of $330 million related to our Phosphate operations, which impacted net earnings and brings the total impairment reversal to $780 million for the first nine months of 2022. Cash provided by operating activities increased in the third quarter and first nine months of 2022 compared to the same periods in 2021 due primarily to higher net earnings.

Segment Results

Our discussion of segment results set out on the following pages is a comparison of the results for the three and nine months ended September 30, 2022 to the results for the three and nine months ended September 30, 2021, unless otherwise noted.

Nutrien Ag Solutions (“Retail”)

Three Months Ended September 30

(millions of US dollars, except

Dollars

Gross Margin

Gross Margin (%)

as otherwise noted)

2022

2021

% Change

2022

2021

% Change

2022

2021

Sales

Crop nutrients

1,605

1,194

34

214

246

(13)

13

21

Crop protection products

1,716

1,469

17

436

374

17

25

25

Seed

134

140

(4)

33

56

(41)

25

40

Merchandise

241

265

(9)

41

44

(7)

17

17

Nutrien Financial

65

54

20

65

54

20

100

100

Services and other 1

244

252

(3)

153

170

(10)

63

67

Nutrien Financial elimination 1, 2

(25)

(27)

(7)

(25)

(27)

(7)

100

100

3,980

3,347

19

917

917

23

27

Cost of goods sold

3,063

2,430

26

Gross margin

917

917

Expenses 3

890

808

10

Earnings before finance

costs and taxes (“EBIT”)

27

109

(75)

Depreciation and amortization

206

182

13

EBITDA

233

291

(20)

Adjustments 4

2

n/m

Adjusted EBITDA

235

291

(19)

1 Certain immaterial figures have been reclassified for the three months ended September 30, 2021.

2 Represents elimination for the interest and service fees charged by Nutrien Financial to Retail branches.

3 Includes selling expenses of $821 million (2021 – $746 million).

4 See Note 2 to the interim financial statements.

Nine Months Ended September 30

(millions of US dollars, except

Dollars

Gross Margin

Gross Margin (%)

as otherwise noted)

2022

2021

% Change

2022

2021

% Change

2022

2021

Sales

Crop nutrients

7,740

5,255

47

1,417

1,169

21

18

22

Crop protection products

6,086

5,220

17

1,523

1,137

34

25

22

Seed

1,861

1,819

2

382

362

6

21

20

Merchandise

755

763

(1)

133

127

5

18

17

Nutrien Financial

205

138

49

205

138

49

100

100

Services and other 1

729

737

(1)

555

570

(3)

76

77

Nutrien Financial elimination 1

(113)

(76)

49

(113)

(76)

49

100

100

17,263

13,856

25

4,102

3,427

20

24

25

Cost of goods sold

13,161

10,429

26

Gross margin

4,102

3,427

20

Expenses 2

2,733

2,467

11

EBIT

1,369

960

43

Depreciation and amortization

550

528

4

EBITDA

1,919

1,488

29

Adjustments 3

(17)

9

n/m

Adjusted EBITDA

1,902

1,497

27

1 Certain immaterial figures have been reclassified for the nine months ended September 30, 2021.

2 Includes selling expenses of $2,556 million (2021 – $2,276 million).

3 See Note 2 to the interim financial statements.

  • Adjusted EBITDA in the first nine months of 2022 increased due to higher sales and gross margins across nearly all product categories and regions where we operate. This was supported by strong agriculture fundamentals, higher selling prices and growth in proprietary products sales. Adjusted EBITDA decreased in the third quarter of 2022 compared to the prior year’s record results as strong crop protection product margins were offset by lower margins in other product categories as well as inflation on certain expense items in 2022. Retail cash operating coverage ratio 1 improved as at September 30, 2022 to 55 percent from 59 percent in the same period in 2021 due to significantly higher gross margin.
  • Crop nutrients sales increased in the third quarter and first nine months of 2022 due to higher selling prices. Gross margin and gross margin per tonne increased in the first nine months of 2022 compared to the same period last year due to strategic procurement and the timing of inventory purchasing in the first half of 2022, with a decrease in the third quarter of 2022 due to higher cost inventory. Sales volumes decreased in the first nine months of 2022 due to reduced application resulting from a delayed planting season in North America and earlier engagement in the prior year in a rising price environment.
  • Crop protection products sales and gross margin increased in the third quarter and first nine months of 2022, particularly in North America, due to higher prices along with increased sales and gross margin in proprietary products. Gross margin as a percentage of sales increased in the first nine months of 2022, supported by the reliability of our supply chain and strategic procurement in a rising price environment.
  • Seed sales and gross margin increased in the first nine months of 2022 due to higher pricing and an increase in proprietary seed margins, with a decrease in the third quarter of 2022 as a result of timing and mix of seed sales compared to the same period in 2021.
  • Merchandise gross margin for the first nine months of 2022 increased due to strong margin performance in Australia animal health products from increased flock and herd sizes, with a decrease in the third quarter of 2022 due to an unfavorable foreign exchange rate impact on Australian dollars.
  • Nutrien Financial sales increased in the third quarter and first nine months of 2022 due to higher utilization and adoption of our programs and a higher interest-bearing trade receivable balance, driven by strong commodity pricing.
  • Services and other decreased in the third quarter and first nine months of 2022 mainly due to lower livestock volumes as wet conditions in Australia impeded movement, along with an unfavorable foreign exchange rate impact on Australian dollars.
1 These (and any related guidance, if applicable) are non-IFRS financial measures. See the “Non-IFRS Financial Measures” section for further information.

Potash

Three Months Ended September 30

(millions of US dollars, except

Dollars

Tonnes (thousands)

Average per Tonne

as otherwise noted)

2022

2021

% Change

2022

2021

% Change

2022

2021

% Change

Manufactured product

Net sales

North America

436

483

(10)

619

1,515

(59)

703

319

120

Offshore

1,568

705

122

2,548

2,276

12

616

310

99

2,004

1,188

69

3,167

3,791

(16)

633

313

102

Cost of goods sold

386

372

4

122

98

24

Gross margin – total

1,618

816

98

511

215

138

Expenses 1

352

146

141

Depreciation and amortization

35

35

2

EBIT

1,266

670

89

Gross margin excluding depreciation

Depreciation and amortization

112

131

(15)

and amortization – manufactured 3

546

250

119

EBITDA

1,378

801

72

Potash controllable cash cost of

Adjustments 2

7

(100)

product manufactured 3

70

55

27

Adjusted EBITDA

1,378

808

71

1 Includes provincial mining taxes of $348 million (2021 – $128 million).

2 See Note 2 to the interim financial statements.

3 These are non-IFRS financial measures. See the “Non-IFRS Financial Measures” section.

Nine Months Ended September 30

(millions of US dollars, except

Dollars

Tonnes (thousands)

Average per Tonne

as otherwise noted)

2022

2021

% Change

2022

2021

% Change

2022

2021

% Change

Manufactured product

Net sales

North America

1,949

1,141

71

2,770

4,157

(33)

703

275

156

Offshore

4,573

1,475

210

7,149

6,412

11

640

230

178

6,522

2,616

149

9,919

10,569

(6)

658

248

165

Cost of goods sold

1,090

980

11

110

93

18

Gross margin – total

5,432

1,636

232

548

155

254

Expenses 1

975

333

193

Depreciation and amortization

36

35

2

EBIT

4,457

1,303

242

Gross margin excluding depreciation

Depreciation and amortization

354

371

(5)

and amortization – manufactured

584

190

207

EBITDA

4,811

1,674

187

Potash controllable cash cost of

Adjustments 2

9

(100)

product manufactured

56

51

10

Adjusted EBITDA

4,811

1,683

186

1 Includes…



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